How to Read and Analyze Condo Financial Statements [Tutorial]

How to Read and Analyze Condo Financial Statements: www.hauseit.com/condo-coop-bu...
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In this www.hauseit.com/ tutorial, we will be showing you how to Analyze the Financial Statements of a condominium. Now if you're watching this video, you're likely a home buyer. You may even be a real estate agent, broker, salesperson or you could even be a real estate attorney.
The ability to review the financial statements for a condo is a very important skill for all market participants in real estate. In particular, it's very important to be able to analyze a financial statement primarily because it will give you an idea of whether or not the building is well run, prudently capitalized and it will basically give you a preview as to whether or not you would seek to expect any unusually high operating expenses once you've actually purchased a property.
If you're a real estate agent, the ability to analyze financials will help give you a bit of an edge versus other agents who may not be able to advise their clients on how to actually analyze a financial statement. It's also worth remembering that in terms of responsibility load during a purchase, a real estate attorney will be the one who conducts ultimate due diligence on a condo prior to a buyer signing a contract so as a broker or even as a buyer you certainly can request the financials prior to the accept that offer stage.
You can review them yourself, but it's also good to know and remember that a real estate attorney will require the financial statements as well as the offering plan, house rules and any other building documentation such as the purchase application and sublet application in order to complete due diligence prior to advising their client that it's an appropriate time to sign the contract.
In this video we're going to walk you through a financial statement. It's a real financial statement for a building here in New York City, and we're going to go through the sections that are important for you as a buyer, as a broker or even as an attorney. So the first thing you want to do when you open up a financial statement is you want to obviously check the year.
Usually attorneys look for the two most recent years for the purposes of looking at the due diligence materials, so depending on where you are in the calendar year it is possible that the building may be in the next fiscal year but they might not necessarily have the financials ready for the one prior. So you may want to be mindful of that, and also when it comes to a mortgage lender if the building has taken unreasonably long amount of time to actually come up with the most recent years financial statement, it may be an issue.
In this case, we're looking at a historical statement so not going to go into the details of the calendar but just keep in mind, make sure you get the two most recent years of financials for you to analyze. So as you scroll down into the financial statements, the first section is going to be usually it's going to be some sort of auditor's report or opening letter. In this case the financial statement is audited which means that basically an independent auditor has evaluated the financials and been able to come up with an opinion as to the financial statements themselves.
If a financial statement is unaudited, it means that the actual accountant is not preparing and providing any opinion as to what is contained within the financial statements themselves. So when you're looking at audited financial statements, you you can obviously start by looking at the various notes and you can read through those but the most important thing is to look at the actual opinion section. Now when you're looking at the opinion section, you basically want to be looking for the following phrase: "presented fairly in all material respects."
Disclaimer: Hauseit and its affiliates do not provide tax, legal, financial or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal, financial or accounting advice. You should consult your own tax, legal, financial and accounting advisors before engaging in any transaction.
Analyzing Condo and Coop Building Financial Statements in NYC: www.hauseit.com/condo-coop-bu...
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[@Hauseit]

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[@husher5142]

As someone who joined a board without a budget, or anything /o\ and refuses to pass a motion for lawyer direction - this is very helpful.

[@AghMotherland]

This is great! Not many people bother to look at HOA and Condo finances when buying. I am reluctantly moving into one for the first time and wanted to go over their financials before signing. I had no idea what I was looking at before this video but you have really made it easy to understand it and to let me know that they are doing great financially. I have heard too many bad stories of owners having huge bills from mismanagement so this really eased my mind. Thanks again.

[@Hauseit]

Thanks for your support, and congratulations on the new home!

[@husher5142]

Also do not take peoples words for it - always look at them yourself. I had a few friends living in the condominium. I asked about the reserve fund and bunch of stuff ... yeah yeah its all good. >.> not good, lesson learned. Now i joined the board and i cannot get existing members to hand over financials to build a budget (i was voted on treasurer). No change of directors filed since early 2000s .. big mess.

[@RJM316]

This is a great presentation! I am in the research stage of converting a small property in NYC into a condo and this presentation was extremely helpful. Thank you.

[@Hauseit]

Wonderful Ruth! How do you plan on selling it? Would you consider our Agent Assisted FSBO listing service, where you can save all 6% if you find a direct buyer?

[@CompetitiveAnalysis]

A great way to get your first pass at condo doc financials. Solid presentation. Thank you.

[@Hauseit]

Thanks for the kind words, Vish!

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[@militaryfriendlyagents]

Thank you this was very helpful

[@Hauseit]

Thanks for your support! 🙏

[@manitou5490]

Good job!

[@carolm3417]

Good. How do I get my hands on them though? Does seller provide?

[@Hauseit]

Yes, typically the seller or seller's agent will provide them to the buyer after there's an accepted offer!